Why the poor do not expropriate the rich: an old argument in new garb

We consider a political economy with two partisan parties; each party represents a given constituency of voters. If one party (Labour) represents poor voters and the other (Christian Democrats) rich voters, if a redistributive tax policy is the only issue, and if there are no incentive considerations, then in equilibrium the party representing the poor will propose a tax rate of unity. If, however, there are two issues – tax policy and religion, for instance – then this is not generally the case. The analysis shows that, if a simple condition on the distribution of voter preferences holds, then, as the salience of the non-economic issue increases, the tax rate proposed by Labour in equilibrium will fall – possibly even to zero – even though a majority of the population may have an ideal tax rate of unity.     

Demand of direct democracy

The growing demand for referendum challenges the traditional model of representative democracy. In this paper we study under which conditions voters prefer a system of representative democracy to direct democracy. In direct democracies voters choose a policy among two alternatives, under uncertainty about which policy better fits the realized state of the world; in representative democracies voters select a candidate who, once elected, chooses a policy having observed which is the realized state of the world. Voters and politicians' payoffs depend on a common component which is positive only if the policy fits the state of the world, and on a private ideological bias towards one of the policies. In direct democracies voters are uncertain about the future state of the world, while in representative democracies they are uncertain about the degree of ideological bias of the candidates, even if they know towards which policy each candidate is biased. We show that representative democracy is preferred if (i) the majority of voters are pragmatic (the common component prevails), and (ii) society is ideologically polarized, meaning that the majority of voters are ideological (the private component prevails), but the median voter is pragmatic. Direct democracy is the preferred instrument for collective choices in societies in which the majority of voters and the median voter are ideological, implying that the majority of voters have the same ideological bias, as, for instance, it occurs when the populist rhetoric of people against the elite succeeds.     

IMPERFECTLY INFORMED VOTERS AND STRATEGIC EXTREMISM

We analyze a two‐candidate Downsian model considering that voters use shortcuts (e.g., interest‐group/media endorsements) to infer candidates' policy platforms. That is, voters do not observe candidates' exact platforms but only which candidate offers the more leftist/rightist platform (relative positions). In equilibrium, candidates' behavior tends to maximum extremism, but it may converge or diverge depending on how voters behave when indifferent policywise between the candidates. When the tie‐breaking rule used by the voters is sufficiently fair, candidates converge to the extreme preferred by the median voter, but when it strongly favors a certain candidate, each candidate specializes in a different extreme.     

Repeated Elections with Asymmetric Information

An infinite sequence of elections with no term limits is modelled. In each period a challenger with privately known preferences is randomly drawn from the electorate to run against the incumbent, and the winner chooses a policy outcome in a one-dimensional issue space. One theorem is that there exists an equilibrium in which the median voter is decisive: an incumbent wins re-election if and only if his most recent policy choice gives the median voter a payoff at least as high as he would expect from a challenger. The equilibrium is symmetric, stationary, and the behavior of voters is consistent with both retrospective and prospective voting. A second theorem is that, in fact, it is the only equilibrium possessing the latter four conditions — decisiveness of the median voter is implied by them.     

Hotelling–Downs Competition with Free Entry When Voters Have an Option to Contest

Osborne shows that for almost all distributions of voters’ preferences, a pure strategy Nash equilibrium does not exist in the classical Hotelling–Downs model of electoral competition with free entry. We show that equilibrium is generically possible if in addition one allows voters an option to announce their candidacy to compete side‐by‐side with office‐seeking players. The model studied in this paper renders Osborne and the celebrated citizen‐candidate model à la Osborne and Slivinski as two extreme cases. We characterize the equilibrium set with two central questions: (i) can there be equilibria where only voters contest? and (ii) are equilibria with contesting office‐seeking players possible? We also show that in our general setting, extremists are typically voter‐candidates so that in every two‐party contest, office‐seeking politicians stay out of competition.     

Impact of electoral competition,swing voters and interest groups on equilibrium policy platforms: Exploring the strategic forces at work

This paper constructs a stylized model of election between two opportunistic candidates who can influence equilibrium policy platforms in exchange for monetary contributions provided by two distinct lobby groups. Two key features are embedded which give rise to a dual uncertainty in the model: the existence of partisan spread across voter groups as well as the embezzlement of campaign funds received by the electoral candidates from the interest groups. We derive and compare the equilibrium platforms of the two office-seeking candidates in three scenarios: none of the above uncertainties exist (benchmark case), only uncertainty about voters’ preferences exist (swing-voter case), and both the uncertainties exist (swing voters and lobby groups case). We find that an opportunistic candidate’s swing-voter tax platform is always lower than the benchmark tax platform. Additionally, the equilibrium tax choice of electoral contenders in the swing voters and opposing lobby groups case is found to be greater than the tax level chosen under the swing-voter case if the lobby group advocating a greater level of tax is sufficiently well-organized such that it outweighs the relative swing-voter effect in that group. Furthermore, we find that when an electoral candidate transitions from being highly corrupt to becoming relatively more honest, the equilibrium level of public good provision adjusts in conformity with the well-organized group’s economic preferences. Finally, if the strength of relative lobbying effect is weaker, a lower partisan bias within that group induces an electoral candidate to choose a tax platform closer to that group’s policy bliss point.     

Playing for Your Own Audience: Extremism in Two‐Party Elections

This paper considers a two‐party election with a single‐dimensional policy space. We assume that each voter has a higher probability of observing the position of the party he is affiliated with than the position of the other party, an assumption that is consistent with the National Election Studies (NES) electoral data set. In equilibrium, the two parties locate away from the median, because the voters who dislike a party's platform observe its policy choice with a lower probability, and its own audience like policy choices that cater to its taste. As the asymmetry in voter information or the cost of voting increases, the parties adopt more extreme platforms, while if there are fewer extreme voters the opposite effect occurs. Making voters more symmetrically informed about the two parties' platforms increases the welfare of society, while asymmetric information acquisition by the voters is worse than no information acquisition at all.     

Bandwagons and Momentum in Sequential Voting

In this paper I show that an equilibrium exists to the sequential voting game in which a bandwagon begins with probability 1. These bandwagons are driven by a combination of beliefs and the desire of voters to vote for the winning candidate. Significantly, in this equilibrium the pivot probability for each voter is non-zero, even in an infinite population. Consequently, the bandwagons do not always start after one (or at most two) favourable decisions (as do economic cascades) and varying levels of informative voting are observed, consistent with observations from sequential voting in U.S. presidential primaries. Further, voters are exposed to counterintuitive incentives, referred to as "buyers' remorse", that have been attributed to real primary voters.
I also derive equilibrium behaviour in this environment when voting is simultaneous and compare the quality of information aggregation within each mechanism. I relate the conclusions to U.S. presidential primaries and find they are consistent with a common conclusion about the front-loading of the primary process: that in tight elections (with no front-runner) simultaneous voting is preferred, whereas in lopsided elections sequential voting is preferred. The superior performance of sequential voting in lopsided races is precisely because bandwagons occur.     

A Psychologically Based Model of Voter Turnout

We analyze a psychologically based model of voter turnout. Potential voters experience regret if they fail to vote, which is the motivation for participation in voting. Regret from abstention is inversely related to the margin of victory. Voters on the winner's side experience less regret than those on the loser's side. We show that the unique equilibrium involves positive voter turnout. We show that the losing side has higher turnout. In addition, voter turnout is positively related to importance of the election and the competitiveness of the election. We also consider scenarios in which voters are uncertain about the composition of the electorate's political preferences and show similar phenomena emerge.     

Immigration and income redistribution in welfare states

This paper sets out a political economy model where median voters who benefit from local income redistribution are affected by the fiscal burden of welfare payments to immigrants. The median voters also have cultural preferences. Immigrants are influenced in their relocation decision by welfare benefits in host countries. Uncoordinated, coordinated and leader–follower domestic welfare policies are compared. In the last case, the median voter in the follower country is better off than the median voter in the leader country because of a less generous welfare system and hence fewer immigrants.     

Let the experts decide? Asymmetric information,abstention, and coordination in standing committees

We examine abstention when voters in standing committees are asymmetrically informed and there are multiple pure-strategy equilibria – swing voterʼs curse (SVC) equilibria where voters with low-quality information abstain and equilibria when all participants vote their information. When the asymmetry in information quality is large, we find that voting groups largely coordinate on the SVC equilibrium which is also Pareto optimal. However, we find that when the asymmetry in information quality is not large and the Pareto optimal equilibrium is for all to participate, significant numbers of voters with low-quality information abstain. Furthermore, we find that information asymmetry induces voters with low-quality information to coordinate on a non-equilibrium outcome. This suggests that coordination on “letting the experts” decide is a likely voting norm that sometimes validates SVC equilibrium predictions but other times does not.     

Fairness in tax compliance: A political competition model

This paper analyzes the political economy of income redistribution when voters are concerned about fairness in tax compliance. We consider a two‐stage model where there is a two‐party competition over the tax rate and over the intensity of the tax enforcement policy in the first stage, and voters decide about their level of tax compliance in the second stage. We find that if the concern about fairness in tax compliance is high enough, a liberal middle‐income majority of voters may block any income redistribution policy. Alternatively, we find an equilibrium in which the preferences of the median voter are ignored in favor of a coalition formed by a group of relatively poor voters and the richest voters. In this equilibrium income redistribution prevails with no tax enforcement.     

Racism and redistribution in the United States: A solution to the problem of American exceptionalism

The two main political parties in the United States in the period 1976–1992 put forth policies on redistribution and on issues pertaining directly to race. We argue that redistributive politics in the US can be fully understood only by taking account of the interconnection between these issues in political competition. We identify two mechanisms through which racism among American voters decreases the degree of redistribution that would otherwise obtain. In common with others, we suggest that voter racism decreases the degree of redistribution due to an anti-solidarity effect: that (some) voters oppose government transfer payments to minorities whom they view as undeserving. We suggest a second effect as well: that some voters who desire redistribution nevertheless vote for the anti-redistributive (Republican) party because its position on the race issue is more consonant with their own, and this, too, decreases the degree of redistribution in political equilibrium. This we name the policy bundle effect. We propose a formal model of multi-dimensional political competition that enables us to estimate the magnitude of these two effects, and estimate the model for the period in question. We compute that voter racism reduced the income tax rate by 11–18% points; the total effect decomposes about equally into the two sub-effects. We also find that the Democratic vote share is 5–38% points lower than it would have been, absent racism. The magnitude of this effect would seem to explain the difference between the sizes of the public sector in the US and northern European countries.     

Learning about challengers

We examine a political agency problem in repeated elections where an incumbent runs against a challenger from the opposing party, whose policy preferences are unknown by voters. We first ask: do voters benefit from attracting a pool of challengers with more moderate ideologies? When voters and politicians are patient, moderating the ideology distribution of centrist and moderate politicians (those close to the median voter) reduces voter welfare by reducing an extreme incumbent's incentives to compromise. We then ask: do voters benefit from informative signals about a challenger's true ideology? We prove that giving voters informative, but sufficiently noisy, signals always harm voters, because they make it harder for incumbents to secure re-election.     

SEQUENTIAL VOTING WHEN LONG ELECTIONS ARE COSTLY

This paper analyzes sequential voting in binary elections when voters are motivated by a desire both to elect their preferred candidate and to avoid a long and costly election. I find a unique equilibrium in which a voter's action depends both on the intensity of the voter's preferences as well as how well the candidates have done in earlier voting rounds. This equilibrium results in momentum in which voters are more likely to vote for the candidate currently in the lead. Furthermore, the probability a voter votes for a candidate is increasing in the size of the candidate's lead. As a consequence, a candidate is more likely to win the election if the candidate's stronger supporters vote earlier in the election.     

Campaign Spending with Office-Seeking Politicians, Rational Voters, and Multiple Lobbies

I introduce a microfounded model of campaign finance with office-seeking politicians, a continuum of voters, and a large number of heterogeneous lobbies. Lobbies make contributions to politicians according to a common agency framework. Politicians use contributions to finance their electoral expenditures. Voters are not fooled by electoral expenditures: they are influenced in a way that is consistent with the equilibrium behavior of lobbies and politicians. The model is used to: (i) determine the relation between campaign spending and the deviation from the median voter's preferred policy; (ii) show the informational value of lobbies' contributions; (iii) evaluate the welfare implications of restricting campaign spending; and (iv) interpret the empirical finding that campaign expenditures have a very low effect on election outcome. Although in equilibrium advertising provides voters with useful information, under reasonable parameter values, a ban on campaign contributions makes the median voter better off. Journal of Economic Literature Classification Numbers: D72, D82, M37.     

Voting Equilibria in Multi-candidate Elections

We consider a general plurality voting game with multiple candidates, where voter preferences over candidates are exogenously given. In particular, we allow for arbitrary voter indifferences, as may arise in voting subgames of citizen-candidate or locational models of elections. We prove that the voting game admits pure strategy equilibria in undominated strategies. The proof is constructive: we exhibit an algorithm, the "best winning deviation" algorithm, that produces such an equilibrium in finite time. A byproduct of the algorithm is a simple story for how voters might learn to coordinate on such an equilibrium.     

Budget Deficits and Redistributive Politics

This paper proposes a new view of the forces in the political process thatcause governments to accumulate debt. The analysis builds on a model of redistributive politics that, contrary to median voter models, does not restrict the set of policies that politicians can propose. I show that deficits occur even in an environment where voters (and periods) are homogeneous. This is an environment where previous political theories of debt would predict budget balance. In the model deficits are a way for candidates to better target promises to voters and are therefore used as tools of redistributive politics. The main contribution of the analysis is to show that the same forces that push candidates to redistribute resources across voters to pursue political advantage are forces that generate budget deficits.     

Design of reforms with time‐inconsistent voters

Widespread agreement that a political reform is necessary is no guarantee that it is actually undertaken in a timely manner. There is often a delay before action is taken and reform packages that would be most efficient to implement all at once are often done only gradually. We propose a theoretical model explaining this behavior and show that when voters have present‐biased, time‐inconsistent preferences, gradualism can arise in equilibrium and be welfare‐enhancing. This is because without the possibility for gradualism, time‐inconsistent voters would delay implementing the reform even more. Using a citizen candidate model, we allow the agenda setter, who decides which reform schedule to put to vote, to be endogenously determined. We show that voters who are aware of their own time inconsistency can use the election of the agenda setter as a commitment device and appoint an agent who is more patient than the median voter in order to avoid full procrastination and to achieve efficiency‐maximizing gradualism.     

RETROSPECTIVE VOTING AND PARTY POLARIZATION

We provide a new and favorable perspective on voter naiveté and party polarization. We contrast sophisticated (Nash) versus retrospective voting in a model where two parties commit to policies. Retrospective voters do not understand the mapping between states and outcomes induced by a policy; instead, they simply vote for the party that delivers the highest observed performance, as determined in equilibrium. We show that parties have an incentive to polarize under retrospective, compared to Nash, voting. Moreover, this polarization often results in higher welfare due to a better match between policies and fundamentals.